when you get 1099 from the fund those short-term capital gain distributions will be included with dividend income. That's the tax law. you do not report then as STCG. Capital gain distributions reported on 1099-Div are only LTCG distributions. so trying to take capital losses to offset the STCG distributions won't work. if you think the funds violated anty securities laws consult a securities lawyer. as for tax penalties for 2021. if your withholding and timely estimated tax payments = 100% of 2020 tax (110% if your adjusted gross income for 2020 was over $150k), there will be no penalties no matter how much you may owe. so you may want to make sure that your combined federal withholding in 2021meets the above applicable threshold.
